Professor John M. McCann
Fuqua School of Business
Duke University
An early version of this paper appeared in Brandweek, January 16, 1995, p. 18
Brandweek has been the site of several articles and columns about category management (CM), with the recurring themes that CM is here, and CM has not been a success. A recent article ("Brands Overboard," Brandweek, August 22, 1994) contains some data on why CM has not succeeded, and what must be done to make it a success. According to the survey research reported in that article, retailers believe that inadequate support from the Management Information Systems (MIS) department was the number one reason why "CM initiatives have been less than successful." From the manufacturers' viewpoint, MIS support is the second most important factor in the development of successful CM initiatives.
This situation is not at all surprising to me because of my studies of how information technology (IT) is changing consumer packaged goods firms and retailers.
IT as a Strategic Weapon
In the early days of data processing, information technology was the clear province of the Data Processing Manager. His role was to automate the clerical and accounting operations in the firm.
But those days are long gone. Information technology is no longer a tool used to reduce the cost of doing business. In a company after company, it has moved from the back room to the executive suite, where it is thought of as a strategic weapon ... as a means of gaining a strategic competitive advantage. In those firms, business managers have learned how to think strategically about the use of technology. They have learned that information is now part of their products.
The Enhanced Product
The notion that the physical product can be enhanced by information is an old concept to the marketing managers in consumer packaged goods firms. They have long used advertising, which is a form of information, to develop a brand "personality" so that consumers would attach meaning to the brand over and above its physical attributes.
Brand managers spend their time studying consumers and working with advertising agencies to find and communicate the right image for their brand. Since advertising is a means for establishing a strategic competitive advantage, marketing managers make sure they understand how it works and how they can use it to their advantage. From a financial viewpoint, they have to be on top of advertising because it represents most of their budget.
At least it used to be most of their budgets. Have you looked lately where that marketing budget goes? The ad agency is getting less and less, and the retailer is getting more and more. The target of the majority of a brand's budget is usually the customer, not the consumer.
The New Enhanced Product
When the target shifts to the retailer, the use of information to enhance the product becomes even more important. But this time, the advertising agency is not the key partner in product enhancement, it is the IT professional. Marketing programs aimed at the customer are becoming computer dependent because the computer is the means by which information is attached to the product.
As one marketing manager said when describing how he was able to achieve brand growth: "We earned that business by being tops on delivering actionable data" (Computerworld, November 14, 1994, p. 133). In the eyes of the customer, the brand is clearly enhanced when marketing managers can provide information about how the retailer can use the brand to increase profits. Such information is the essence of category management.
It's Your Responsibility
What does this mean for the readers of Brandweek? It means that the responsibility for implementing computer-dependent marketing programs resides in the hands of the marketing manager, not the IT manager. In those situations, and category management is one of them, computing is a key resource. Thus the development and deployment of the computing resource is the marketing managers' responsibility.
When a marketing manager is creating an advertising-dependent marketing program, whose responsibility is to develop the advertising? The marketing manager's, of course. That responsibility cannot be shifted to the ad agency alone. The tasks associated with advertising development can be given to the agency, but not the responsibility It must be shared.
Just as today's marketing managers must know about advertising, they must also know about computing. Category management failures make this all too obvious. And, CM initiatives are just one of many that will become increasingly important to brands as we leave the mass marketing dominated "industrial era" and arrive in the new "information era" where computer-intensive marketing strategies and programs are common